Motley Fool recommends three small caps ‘ideal’ for monthly passive income

The Motley Fool has identified three REITs that have high dividend yields, which makes them “ideal” to buy for investors seeking passive income each month. REITs are among the few types of companies that pay monthly dividends.

Agree Realty, which owns over 2,370 properties across the U.S., offers a dividend yield of around 4%, according to the Motley Fool. That’s more than double the average dividend yield of the broad-market S&P 500 index. Based on the publication’s calculations, every $1,000 invested in Agree Realty translates into approximately $3.33 in monthly dividends, or $40 annually. Agree Realty recently announced a 1.2% increase in its monthly dividend to $0.256 per share. That equates to a 2.4% annual increase.

EPR Properties, whose portfolio focuses on entertainment and leisure venues such as movie theaters and dining establishments, has a dividend yield exceeding 7%, notes the Motley Fool. With its 2024 financials, the company announced a 3.5% year-over-year increase in its monthly dividend to $0.295 per share. The Motley Fool adds that EPR is well-positioned to afford this: As of December 31, the company had $22.1 million in cash, $175.0 million outstanding on a $1 billion unsecured revolving credit facility, while carrying $300 million in consolidated debt maturing in 2025. 

Stag Industrial, which specializes in industrial real estate, offers a dividend yield of 4.5%, according to the Motley Fool. In January, the company announced a modest increase in its monthly dividend of just under 1% to $0.124 per share. The Motley Fool notes that Stag has raised its dividend every year since going public in 2011. The company generates about $95 million in annual free cash flow after dividends, which it uses to help fund further investments. Each year, it invests several hundred million dollars in expanding its portfolio, with between $350 million and $550 million planned for this year.